LONDON (Feb 14): Bank of England Governor Mark Carney spoke to Reuters about Brexit, the impact of December’s election on Britain’s economy, climate change and how technology might eventually help economies around the world to grow more strongly.
Below are comments made by Carney during the interview.
THE ECONOMIC IMPACT OF CORONAVIRUS
“We don’t know the full level of the impact. It comes at a time when the global economy has been softer, it’s certainly softer relative to what it was in 2003 when SARS came in as well. There had been signs of the global economy stabilizing, potentially starting to pick up and so it’s potentially that we’re going to have to look through a quarter or two of data that have been more heavily impacted by this.”
“We are watching it closely, as are other central banks and fiscal authorities, and if it necessitates some form of action, whether it’s on the macro-prudential side or the policy side, we will take it.”
POST-BREXIT ECONOMIC POLICY IN UK
“In an environment where everything is getting a fresh look, it’s fertile ground for taking a step back and making bigger changes than otherwise might have been made. It’s early days but there are several initiatives - the budget will be telling - that suggest that some of these opportunities are being grasped.”
HOW BREXIT UNCERTAINTY HAS WEIGHED ON GROWTH
“It’s absolutely clear in the data, whether both the survey data and the hard data, that it’s had an impact, a notable impact, on investment and of course that flows through to productivity.”
HOW THE ELECTION HAS IMPACTED THE UK ECONOMY
“Some of the uncertainty about where we are headed (on Brexit) is being reduced. We are already seeing a rebound in confidence, business confidence and to some extent a firming of consumer confidence... associated with the removal of some of the big, negative, left-hand tail risks.”
HOW TECHNOLOGY COULD BOOST PRODUCTIVITY
“I feel that there is an element of something that is fundamentally positive which is the advent of machine learning, big data, the reorganization of the economy that comes with really breakthrough technologies. Historically that has been associated, at least initially with weaker productivity growth as the leaders apply these technologies very quickly but reorganizing the whole economy for that takes time and you have that dampening effect. I feel that there’s an element of that which will take a while to play out.”
HOW TO PUSH COMPANIES ON CLIMATE CHANGE
“It’s the transition, stupid. It’s not just green assets and divestment campaigns or certain things are so brown or black – every company ultimately has to have a plan for a transition and what the opportunities are and where the risks are.
“For Glasgow (climate conference) that must be well on the path. That is the norm. That the question doesn’t even have to be asked because companies are answering that question as part of their strategy.”
“The EU will look to legislate disclosure standards...It would be productive if other jurisdictions that potentially are going to have mandatory disclosure standards went in parallel, and/or that we used more conventional routes than legislation which would be securities regulation in jurisdictions or listing standards. Let’s have that conversation. No one is going to be forced to do anything but let’s remember what the ultimate objective here is, which is that the providers of capital can make decisions that they need to about the transition and support those companies that are on the right side of history.”